The Massachusetts Department of Revenue (“MA DOR”) recently joined its counterparts in New York and New Jersey in formally promulgating regulatory amendments adopting aspects of the 2021 revised guidance approved by the Multistate Tax Commission (“MTC”) interpreting the protective limits of Public Law 86-272 (“PL 86-272”). 830 CMR 63.39.1(4)(e) (amendment promulgated Oct. 10, 2025). PL 86-272 is a federal law enacted in 1959 that immunizes a seller of tangible personal property from a state’s net income tax if the seller’s in-state activities are limited to solicitation of orders as long as the orders are sent outside the state for approval or rejection, and, if approved, are filled by shipment or delivery from a point outside the state. Since it was first enacted, states have consistently sought to narrow the protective limits of PL 86-272, and with the MTC’s revised guidance formally adopted by New York, New Jersey, and now Massachusetts, there is unmistakable evidence that some states are effectively trying to nullify PL 86-272 altogether. Taxpayers should be prepared to fight back against states when they seek to disregard the federal protection provided to taxpayers by PL 86-272.

States attempting to limit the scope of PL 86-272 protections is not a new development. In Wisconsin Department of Revenue v. William Wrigley Jr. Co., decided in 1992, the U.S. Supreme Court rejected Wisconsin’s argument that protected solicitation activities under PL 86-272 include only explicit requests for orders. 505 U.S. 214, 223-24 (1992). Instead, the Court held that protected solicitation activities include not only “what is strictly essential to making requests for purchases,” but also includes “activities that are entirely ancillary to requests for purchases— those that serve no independent business function apart from their connection to the soliciting of orders—and those activities that the company would have reason to engage in any way but chooses to allocate to its in-state sales force.” Id. at 228-29 (emphasis in original). Therefore, PL 86-272 controversies since Wrigley have often revolved around whether physical in-state activities performed by a seller’s representatives or independent contractors are entirely ancillary to solicitation. 

The MA DOR’s amended regulation adopts the novel idea from the MTC’s 2021 revised guidance that an out-of-state seller can breach PL 86-272 simply by having a website that in-state customers can access and interact with via the Internet. The MA DOR’s amended regulation states that an out-of-state seller can conduct activities in Massachusetts “through an Internet website accessible by persons in the state” that are not ancillary to solicitation, i.e., that breach PL 86-272, “such as the placement of Internet cookies onto the computers or other electronic devices of in-state customers that gather customer search information used to adjust production schedules and inventory amounts, develop new products, or identify new items to offer for sale.” Therefore, under this novel theory, the out-of-state seller need not have any physical presence in Massachusetts, or even specifically direct activities towards Massachusetts, to breach PL 86-272. The fact that a customer or potential customer located in Massachusetts accesses the remote seller’s website can potentially be sufficient to breach PL 86-272 for the out-of-state seller.

It is notable that so few states have formally adopted the MTC’s 2021 revised guidance, which could mean that even many state taxing authorities harbor doubts as to the lawfulness of the revised guidance. To the extent that states like Massachusetts seek to apply these novel theories to unlawfully deny taxpayers the federal protections of PL 86-272, taxpayers should be ready to stand up and fight.